Most investors follow an index.
It’s usually the S&P 500, the Dow Jones Industrial Average, or the NASDAQ Composite Index.
Those indexes are fine. But there’s another index. One that many investors don’t know about.
Yet, in my view, it’s one of the most important indexes there is. It’s certainly helped with my trading. Today, I’ll show how it could help with your trading too.
Let me explain…
The CRB Index: A Leading Indicator
Earlier this week, we told you about the Volatility Index, or VIX. It’s what we call the market’s “fear gauge.”
Today, we’re looking at a very different index… The Commodity Research Bureau (CRB) Index.
The CRB Index is an indicator of the world’s various commodities markets. It’s a weighted basket of 19 different commodities. The heaviest weighting is towards energy and agricultural commodities.
While we don’t trade the CRB Index directly, we like to follow its performance.
We use the chart of the CRB Index as an indicator of underlying industrial demand… as well as to get a sense of global appetite for risk.
If we can identify a technical turn in this index, it can often be a leading indicator for significant movements in markets we do trade – such as equities, fixed income, and currencies.
Take a look…
You can see there was a major technical breakout in this index back in February (when the blue line crossed the black line). That’s why we started targeting the “commodity currencies” in our premium research advisory, Andy Krieger’s Big Trades.
These are the currencies of countries that depend on commodity demand. That includes the Australian dollar, which we traded shortly after the breakout.
In fact, we’ve traded the Aussie dollar 10 times since late February. Eight of those 10 trades have been winners, with gains as high as 59%, 113%, and 299%.
We anticipated that global demand for commodities would plummet. We were able to help investors position themselves accordingly.
Now, the CRB Index just broke through a 21-year low (marked by the red line in the chart above).
This technical break has broad implications for a global economy that has been completely disrupted by COVID-19.
Supply chains around the world have been hit hard. At the same time, producers are grappling with plummeting demand.
This has huge implications for commodities prices. And just as importantly, huge implications for trading profits as well. More to come…
Editor, Money Trends